Puerto Rico Electric Utility Avoids Default
SAN JUAN—The Puerto Rico Electric Power Authority (Prepa) announced that all principal and interest due on Thursday under its revenue bonds has been paid. Prepa is funding the $417-million payment from its operational funds and the sale of relending bonds, as agreed with certain creditors.
Certain Prepa creditors agreed to purchase around $264 million worth of bonds to provide liquidity for capital improvements and other purposes. The relending bonds have a blended interest rate of 8.46%, with maturities ranging from four to six years. The economic terms of these bonds are already factored into the filings with the Puerto Rico Energy Commission on the transition charges and adjustment mechanisms.
“We are pleased to have reached an agreement allowing us to make the payment to out bondholders today and avoid a default. Today’s outcome is another step towards Prepa’s transformation,” said Lisa Donahue, Prepa chief restructuring officer. “As a result of these agreements, we have preserved our cash position as we continue to implement an operational and financial restructuring.”
In addition to making the principal and interest payment, Prepa announced an extension of the Restructuring Support Agreements (RSA) with creditors holding around 70% of Prepa’s outstanding debt to December 15, 2016. As part of the extension, Prepa reached an agreement with Syncora Guarantee, Inc., which insures a portion of Prepa’s bonds.
“Today’s actions show the forward momentum of Prepa’s transformation and the willingness of all parties to work together,” said harry Rodriguez, president of Prepa’s governing board. “Our management and employees remain focused on the restructuring work streams along with the CRO team, which will ultimately provide the people of Puerto Rico with a self-sustaining utility that provides safe electricity to its customers.”